Why ‘free’ is more priceless than ever before
I like the word ‘free’, especially when used in conjunction with the word ‘buffet’. And it seems I am not alone. Because more and more marketing thinkers are eating out on the idea of free.
Chris Anderson started the ball rolling in 2009 with his book ‘Free: The Future of a Radical Price’.
Before you head over to Amazon to buy a second-hand copy, I recommend you do a search for ‘Anderson’ and ‘Free’ on the Wired website. You’ll find a short, well-written article in which the author worked out his main thesis a year before the book was published. And, appropriately enough, it is free to read.
The article starts with the familiar observation about Gillette subsidising its razors in order to win a razor-blade user for life and computer peripherals manufacturers virtually giving away new printers in order to create a revenue stream out of proprietary ink cartridges.
In Anderson’s mind, there are many more ways in which free is changing the world of commerce. One is the concept of ‘freemium’, which is now so well-known that it’s a brainstorm cliché. (It’s the one where you give away the ‘classic’ version for free but you charge a hefty premium for the ‘pro’ package.)
Another is thinking of a product not in terms of a source of income from end-users but as a way to generate advertising revenue. Google and Facebook are the classic examples of this but, in essence, it’s the old commercial television model.
Rather more unique to the internet age is the concept of giving away a product in exchange for valuable labour on the part of the user. An example of this is TripAdvisor. Everyone can enjoy better travel thanks to its advice but only because the content on the site is created for free by its users.
That’s all good stuff but a recent book by Nicholas Lovell called ‘The Curve’ takes the whole free thing further. Lovell has brought something new to the party – the notion of ‘superfans’.
Enter the musical sensation Phish. This group has released over 800 songs. None of them have been radio hits but many have been free to download.
By reaching a huge audience in this way, Phish has found enough appreciative listeners to build a small but lucrative fan base. The band earned over $28m last year. More than Radiohead and Metallica. And virtually all of it from live touring.
The group’s real genius lies in the fact that much of their music is improvisational, which means that die-hard superfans have to go to Phish’s live concerts if they are to experience the group’s complete oeuvre.
‘The Curve’ owes much to Chris Anderson’s first book ‘The Long Tail’, which was the first to point out the extreme Pareto effect that results from the low distribution costs of the internet. However, Lovell goes further in examining the practical implications of this for business, especially in the domain of content.
For example, he argues strongly against the adoption of paywalls by newspapers. Instead, he advocates that newspapers retain free online distribution, yet simultaneously move towards a membership model. In this scenario, newspapers should monetise the passion of a minority of readers by giving them increased editorial access and exclusive content.
Where the book is at its most perceptive is in observing that it is not enough simply to expect the minority of superfans to come forward spontaneously and shower you with money.
Fans need nurturing. And not with anodyne newsletters but with genuine reciprocated commitment. Show a brand more commitment than a mere ‘like’ (even something as simple as volunteering an email address) and a fan should be rewarded with just a little more of what they love. Hopefully, they will then move up to making a micropayment, at which point they will get yet more, and so on.
The direct marketer in me likes this, as it plays to my hobbyhorse that creating mere engagement is not enough. To make them mutually beneficial, relationships need to be worked at. Which, like the proverbial free lunch, always comes at a cost for marketers.
